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Tobacco Trial Witness Avoids Discounting Charge

Economist declines to support claims that markdowns were deliberately aimed at kids.

December 9, 2004, 07:00 pm

WASHINGTON -- An economist testifying against cigarette makers on Thursday balked at supporting the government's allegation that the industry used price discounts to attract underage smokers, reported Reuters.

Economist Frank Chaloupka said the increasing number of discount promotions in recent years would lead to more underage smoking, but he declined to say whether the discounts were deliberately aimed at marketing cigarettes to underage smokers, as the government claims.

Questioned by a tobacco industry lawyer, the University of Illinois economist said it was up to the judge to determine the intent of the discounts. "I'm not here to comment on what Philip Morris should do or shouldn't do with its pricing strategies," Chaloupka said in the 12th week of the government's $280 billion racketeering case against cigarette makers.

The tobacco companies deny they conspired to promote smoking and say the government has no grounds to pursue them after they drastically changed marketing practices as part of the 1998 settlement with state attorneys general.

Chaloupka's testimony is aimed at bolstering the government's charge that tobacco companies have continued marketing cigarettes to underage teens. In pre-written testimony filed with the court, Chaloupka said teenagers are far more price-conscious than adults when it comes to cigarettes, and that the tobacco companies knew the increasing discounts would lead to more underage smoking.

In particular, Chaloupka cited a 1993 discount promotion, known as "Marlboro Friday" that Philip Morris used to help bolster sales of the popular brand.

But Philip Morris lawyer Dan Webb showed U.S. District Judge Gladys Kessler tobacco company documents that indicated the discounts were to fend off competition from inexpensive cigarettes that have flooded the country in the last five years.